MOTOR INDUSTRIES CO. LTD. Vs. CCE

JUDGEMENT

(1.) This appeal arises out of and is directed against the Order -in -Appeal No. 576/2001 -CE dated 4.9.2001 passed by the Commissioner of Customs and Central Excise (Appeals), Bangalore.

(2.) The appellants, M/s Motor Industries Co. Ltd., are manufacturers of excisable goods falling under Chapters 84 and 85 of Central Excise Tariff Act, 1985. They filed declaration under Rule 57G of the Central Excise Rules, 1944 declaring the inputs used in the manufacture of final products as well as those used in the manufacture of intermediate products in respect of which credit of duty was availed in terms of the Rules 57A and 57J of the Rules. In pursuance to such declaration filed, the appellant started availing the credit in terms of Rule 57A to the extent of 95% of the duty paid on the inputs received on or after second day of June 1998 which were used in the manufacture of final products. However in respect of the inputs which were used in manufacture of intermediate products, the appellants availed credit to the extent of 100% of the duty paid, even in respect of inputs received on or after the second day of June 1998. The appellant claimed such credit under bona fide belief that the amendment brought about to the Notification No. 5/94 -CE(NT) dated 1.3.1994 by Notification No. 14/98 -CE(NT) dated 2.6.1998 did not apply in respect of credits taken on inputs used in the manufacture of intermediate products under Rule 57J of the Rules. A Show Cause Notice was issued raising the demand on the ground that the appellants had availed credit in excess of 95% duty paid and that being availed in contravention of the conditions of the Notification No. 14/98 -CE(NT) dated 2.6.1998. The show cause notice was duly answered by the appellants stating that they are entitled to take full credit and stressed that the credit was taken under Rule 57J which falls outside the purview of Notification No. 14/98 -CE(NT) dated 2.6.1998 and the restriction imposed by the Notification does not apply for the transactions falling under Rule 57J because Rule 57J is a "non -obstante clause" which will override the provisions of Rule 57A. The Assistant Commissioner who adjudicated the matter has confirmed the disallowance of the Modvat credit to the extent of Rs. 1.33,185/ - availed by the appellants. The Assistant Commissioner confirmed the demand and passed the order based on the following findings -

(3.) Being aggrieved by the above order the appellants filed an appeal before the Commissioner (Appeals). The Commissioner (Appeals), as per impugned order, upheld the portion of the order passed by the Assistant Commissioner in disallowing the excess credit on inputs received on or after 2.6.1998 and set aside the portion of the adjudicating authority's order, disallowing the excess credit of inputs received prior to 2.6.1998. Hence this appeal.